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The proposal would update electronic recordkeeping rules and add risk-management and compliance requirements for registered transfer agents using blockchain systems.
By:The Defiant Team· Edited byChris Storaker•
Regulation & Politics
The U.S. Securities and Exchange Commission proposed an overhaul of its transfer agent rules on Sept. 1 that would account for electronic and blockchain-based share records while adding updated record-retention, risk-management and compliance requirements.
The direct obligations would fall on registered transfer agents, including tokenization firms or issuers that hold that status. For blockchain-based registries, the proposal’s practical effect would be to place their recordkeeping systems inside a modernized, technology-aware rule framework rather than rules largely written when investors commonly held paper certificates.
The SEC’s fact sheet says proposed amendments to Rules 17ad-6 and 17ad-7 would establish a single retention period for most transfer agent records and modernize provisions governing electronic systems and third-party recordkeepers.
Amendments to Rules 17ad-1 and 17ad-9 would update terminology to reflect contemporary electronic recordkeeping and communications technology. Across the proposal, the SEC also identifies blockchain-based recordkeeping and uncertificated securities as technologies the modernized rules would address.
A rewritten Rule 17ad-12 would require transfer agents to maintain written policies designed to safeguard securities and funds and to identify, measure, monitor and mitigate material risks arising from their operations. Transfer agents would also need a business continuity plan and a separate bank account for issuer, securityholder and third-party funds. Proposed Rule 17ad-30 would separately require written compliance policies and procedures.
Those requirements matter for distributed-ledger systems because the proposing release identifies blockchain data integrity, the security of tokenized securities and distributed-ledger operating models as risks transfer agents must manage. It says current rules are silent on information security, cybersecurity, disaster recovery and operational risk despite the industry’s use of connected and automated systems.
“This proposal would streamline and modernize the Commission’s rules to reflect transfer agents’ current processes and operations, including the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares,” SEC Chair Paul Atkins said in the agency’s announcement.
Staff Guidance Preceded the Proposal
The proposal follows a nonbinding May 2025 staff FAQ in which the SEC’s Division of Trading and Markets said, in its view, that a registered transfer agent could use distributed ledger technology as all or part of its official master securityholder file if it complied with existing federal securities requirements. The FAQ expressly said it represented staff views, not a Commission rule or statement, and carried no legal force.
Under that staff view, a transfer agent would not need to keep an exclusively offchain duplicate of the master file. Records would still have to remain secure, accurate, current, readable by SEC staff and preserved for the required periods. The FAQ also said transaction details such as wallet addresses, balances and transaction IDs could be maintained onchain while names, tax identifiers and other private information remained in proprietary offchain systems.
Commissioner Hester Peirce said the proposal reflects a market in which few paper certificates remain and participants are preparing for more tokenized shares. She asked whether future rules should allow identifiers such as email and digital wallet addresses instead of requiring names and physical addresses.
The SEC’s voting record lists Atkins, Peirce and Commissioner Mark Uyeda as approving the proposal.
The proposal is not yet effective. The public comment period will run for 60 days after publication in the Federal Register, which had not occurred by the reporting cutoff, leaving the calendar deadline unset.
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Source: thedefiant.io